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TESTIMONY OF FCC COMMISSIONER MICHAEL J. COPPS
U.S. HOUSE COMMITTEE ON ENERGY AND COMMERCE 
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET 
“OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION:
THE 700 MHZ AUCTION”
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APRIL 15, 2008
 Good morning Chairman Dingell, Chairman Markey, Ranking Members Barton 
and Stearns and Members of the Committee and thank you for holding this hearing. 
 Auction 73 brought us both good news and bad, but on the most important 
score—providing for the public safety—the news is still out and the really hard work is 
just beginning. We are still nowhere near improving the sad state of communications 
infrastructure available to America’s heroic first responders. And remember this: public 
safety was a primary, and in some minds the hands-down, most important reason, that we 
reclaimed TV channels 52 through 69 in the first place. So there is no more important 
mission for the FCC in 2008 and beyond than finishing this job and doing it right.
 Even after the bumpy auction ride of the past year, I still favor trying to make a 
public-private partnership work. I’ve never said it was the ideal way to go. In fact, as 
some of you may recall, I have long believed that a federally-funded, interoperable 
wireless network—dedicated exclusively to public safety use—would have been the right 
solution. If the previous Commission, in those anxious days following 9/11, had stepped 
forward for such a commitment and dedicated itself to working with the Congress, we 
might have actually made this dream a reality. But that was then and this is now and 
different realities prevail.
 So last summer, I accepted the novel idea of a public-private spectrum partnership 
because it probably represents the last, best chance we have to build a network that will 
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work for public safety. A viable partnership would combine the technical sophistication 
of a commercial network with the demanding coverage and reliability that public safety 
must have in order to provide the nation’s first responders, at long last, with access to a 
national, interoperable broadband network. The most important part of this decision, in 
retrospect, is that for the first time the FCC recognized that we can no longer just assign 
public safety licenses to states and localities, full stop, end of FCC involvement.  
Responding to regional and national disasters and coping with the threat of terror require 
much more than every jurisdiction just doing its own thing. Report after report has 
documented that such an approach has left too many licensees without the ability to 
achieve interoperability and without the funds to build out even local networks. Put more 
bluntly, we have left them without the tools they need to protect us and to protect 
themselves. Seven years after 9/11, this is a profoundly unacceptable result.
 As we considered the details of the public-private model, my number one concern 
was that the network actually work for public safety. In terms of ubiquity, robustness, 
redundancy and many other qualities, the public safety network is a different animal than 
the purely commercial model. If we cannot ensure these attributes, we shouldn’t even be 
proceeding down this road. As I have said before, I would rather have no network 
built—and let public safety go back to the drawing board—than tie up first responders’ 
spectrum in a network primarily or disproportionately dedicated to serving purely 
commercial interests. We simply cannot let this precious opportunity to serve public 
safety be derailed by those who may prefer to enrich private interests at the expense of 
the public well-being. Let me be more blunt: we need to know up-front who among 
potential bidders in a new auction is dedicated to making this model work because there 
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are those who have the power to derail the whole effort, and we’re not going to get 
another chance after the next outing.   
 At the same time, I also recognized that this network had to provide the 
commercial partner with a reasonable rate of return and an expectation of long-term 
profitability—or else the whole arrangement would collapse, leaving public safety 
without a network. Clarity about this is still lacking. Finally, and just as importantly, I 
believed the partnership required an honest broker between public safety and the 
commercial interest. And I devoted much of my effort last year to make that honest 
broker the FCC. I pushed hard, at every turn, to give the FCC oversight authority over 
network negotiations as well as the final say in approving, modifying and enforcing any 
agreement that the parties eventually reached. I knew that this would not be an easy role, 
of course; but given the stakes, it was an essential one. And I say again today: if this 
effort is going to really work, we all need to understand how involved and proactive the 
Commission must be.  I believe we made substantial progress in carving out that role 
before the auction. But then we did so prospectively. This time the FCC needs to 
assume that more active role up-front in the process.
So as we embark on this critically important work, I’d like to identify five 
principles that I believe can lead us to a better outcome this time around:
 First, we need to resolve as many technical details as possible about the 
network before we begin the auction. Last time we were operating on a short time-
frame with a drop-dead date for conducting the auction staring us in the face. Many 
details were left to negotiation between the parties after the auction closed. Our rules 
specified, as you know, that the Commission would thoroughly review whatever the 
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parties agreed upon to ensure it was viable, efficacious and squarely in the public 
interest. But now—although time is precious and the urgency still high—we can do it 
smarter. Our agency must roll up its sleeves this spring and summer, bring the parties 
together, and work with them to make sure the expertise is available, the untold minutia 
of how to build and operate a nationwide wireless network is mastered, and everyone 
knows where this is going before the bidding opens. To me, this means that at least 90% 
of the network sharing agreement must be worked out in advance of the auction. If we 
put enough blood, sweat and toil into it now, we can yet avoid the tears of a failed effort. 
 Second, we need to clarify the roles of each of the partners—public safety 
and the commercial licensee—again before we hold the auction. This means 
specifying the precise duties and responsibilities of the public safety licensee and how it 
will fund itself in the period before the network is built, as well as on a long-term basis.
Of particular importance, we must ensure that this is, at its heart, a non-profit operation.  
But that should not preclude the public safety licensee from hiring experts, including 
those who charge market rates for their services. Indeed, I think it is essential that public 
safety get the nation’s best experts on its staff as soon as possible—people who know 
how to build and operate cellular networks, who understand clearly how much it costs to 
do so, and who can give independent, unbiased advice on what kinds of equipment and 
specifications will serve public safety’s needs. Drawing the line between that kind of 
legitimate and necessary budgeting and allowing someone to profit unduly by advising 
public safety is one of our larger challenges in the months ahead.  
 One avenue for resolving these issues may be for the public safety representative 
to receive some modest funding from Congress or from one of the federal agencies that 
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currently funds interoperability projects—it would not have to be a large amount, just 
enough to support planning and some operational expenses until the effort becomes self-
sustaining.  
 Third, the FCC needs to make sure that it has, in-building or via contract, 
the expertise it needs to contribute network, technical and operational knowledge to 
this effort and to play its honest broker role. We need people who understand how to 
build cellular networks and how much it costs to do so. For example, as we decide the 
geographic coverage requirements for the new network, we need to know what the cost 
difference is for building out to 90 percent versus 99 or 99.3 percent of the nation’s 
population.  We need to understand the costs and benefits, in sparsely-populated areas 
especially, of supplementing terrestrial build-out with satellite technology. There are 
hundreds of highly technical questions, I recognize, but we cannot write rules that strike 
the right balance if we are not fluent in these details.
 So my message is that we need the experts. If we don’t have enough experts 
today, we need to contract for them or to impanel a technical advisory group. If we can’t 
get our hands on this kind of advice, then the FCC has no business even attempting to 
write rules for this auction.
 Fourth, the FCC needs to perform, or otherwise obtain, a careful economic 
analysis—the same kind of analysis that a large carrier would perform before 
building a multi-billion dollar network or an investor would perform before loaning 
money to a new venture. After all, this auction is unlike other auctions we hold here at 
the FCC. Ordinarily, there is no question that spectrum will sell. To be sure, the 
conditions we impose can affect total revenue, but there will be takers at some price. But 
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here we are offering the chance to participate in a public-private partnership that has 
substantial costs as well as benefits. If we put forth rules that create too much 
uncertainty, or don’t allow a reasonable expectation of profit, then we will find that no 
entity is willing to bid. As all of us in this room are well aware, this is not a purely 
academic concern—it’s what happened last time. So we need to do better this time.
Fifth, when the FCC has done the hard work of formulating a set of network 
and operational specifications, we need to put them out for public comment. We 
can’t afford to learn too late that one or another provision would unnecessarily exclude an 
otherwise willing bidder. And we can’t afford to learn that any of our network 
specifications won’t work for public safety or that we have left ambiguity in our rules 
that could cause harmful uncertainty.
 All this is a tall order, I realize. And there are those who will say to us, “Better 
just to make a few tweaks in what you did last time and get on with the next auction.”
But, for me, the time for small tweaks has passed. Sure, we can change the reserve price 
(which I opposed in the first place), and we can even tweak the default penalty provision 
(though there needs to be some incentive for the auction winner to negotiate in good 
faith). But I don’t believe that will give us the data and the understanding we need to
achieve better results in the months ahead. We have a new situation now, and a new 
opportunity to do this right.
Each of my colleagues wants to deliver for public safety. I commend them, and I 
commend Chairman Martin for the thoughtful and receptive approach he has brought to 
this matter. I look forward to working with them, with all the parties, and with this 
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Committee to finally build America’s brave first responders the network they deserve and 
to provide our citizens with the public safety networks they expect.  
* * *
 Let me turn very briefly to the commercial side of the recently-completed 700 
MHz auction. Here the news is decidedly mixed. On the positive side, a lot of money, 
far exceeding most expectations, was raised—and this was smack in the middle of some 
tough economic times. Also on the positive side, we now have enforceable open access 
requirements on the 22 MHz C-Block and a commitment by the Commission to resolve 
complaints within six months. As I have stated before, history makes clear that open 
networks are good for consumers and for businesses. Without openness requirements, we 
would never have the fax machine, the answering machine, or the explosion of dial-up 
services like AOL that introduced most Americans to the Internet.
But in important respects, as I warned when we launched our rules, we end up 
with the same old, same old. The nation’s two largest wireless carriers—who are also the 
nation’s two leading wireline voice and DSL providers—won roughly 85% of the 
licenses, as measured by value. Participation by rural telephone companies was 
disappointing; participation by women- and minority-owned businesses was appalling.
These trends towards consolidation in the wireless marketplace should worry all of us.
Combined with the additional cross-ownership of wireless and wireline assets—which 
raises serious concerns that the wireless data market might develop in ways that are not 
good for American consumers—I find them deeply disturbing. To me, these facts 
underscore the damage that the Commission’s decision to eliminate spectrum caps has 
wrought. I think our friends to the North have the better idea—Canada will auction 105 
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MHz of AWS spectrum next month—with 40% reserved exclusively for new entrants! I 
wish we had followed their model in our own auction.  
 The auction results also deepen my disappointment that the Commission did not 
impose a wholesale requirement on the C-Block. It is now clear that that a wholesale 
requirement would have had minimal impact on overall auction revenue, yet would have 
brought a new entrant to the wireless marketplace. This new entrant would have 
introduced welcome new competition. Even more importantly, unlike existing carriers, it 
would have been legally obligated to provide spectrum to small entrepreneurs at 
wholesale rates. Imagine what a change that would be—if any inventor with a great new 
technology, or any entrepreneur who identifies an underserved market, could simply buy 
spectrum capacity from a nationwide carrier at wholesale rates and offer its product 
directly to consumers. This would also have been a tremendous step forward for women-
and minority-owned businesses eager to get into the wireless market but without the 
staggering capital resources necessary to build a new network from scratch. What a huge 
force for innovation and openness in the wireless market this could have been—and I am 
very sorry that a majority of the Commission rejected the suggestion of high-tech 
innovators, public interest groups, Commissioner Adelstein and me to travel down that 
road.
 Thank you for the opportunity to testify today and I look forward to your 
comments, guidance and questions.